The Associated Press

LOUISVILLE - Kentucky's recreational boaters have paid millions of dollars for a fuel tax that ends up being collected by the marinas that sold the gas.

Kentucky levies a road tax on fuel to ensure that people who use highways pay for maintenance and improvements. But the state refunds taxes paid on fuel used for off-road purposes.

Some users can apply for those refunds - including farmers, miners and other businesses - but not boaters. Instead, the marinas that sell the fuel collect the rebate.

Virginia and about a half-dozen other states return the road tax money collected on marine fuel to boaters. At least 30 states, including Indiana, earmark part of the collections for improving boating facilities, wildlife activities or waterways.

But Kentucky marina owners say they deserve to keep the money and need it to make boating more affordable by using the tax rebates to offset the cost of upkeep and liability insurance.

Some boaters and lawmakers question whether that is fair.

Dathel Peek, 47, a lumber company owner and president of the Lyon County Bass Club, called the marina rebates "one of the biggest coverups I've ever seen."

Peek said it costs him more than $60 to fill up the twin tanks on his bass boat at a marina.

Since 1998, Kentucky has returned about $4.75 million to 91 marinas, according to state records. There are about 175,000 boats and watercraft registered in Kentucky.

Kentucky officials could not identify another revenue program where a tax paid by the public is returned to the middleman who collects it.

A Department of Revenue official said the marina refund has been based on a 1960 state law that calls for the tax to be returned to "any person who buys liquid fuel for the purposes of dispensing it directly into tanks installed in watercraft."